If P dollars is invested at r percent compounded annually, at the end of 2 yers it will grow to A = P(1+r)^2. At what interest rate will $1,000 grow to $1,210 in 2 years?

Question

7345 views around the world

You can reuse this answer
Creative Commons License

Answer 1 · 2018-08-09T11:47:47

Interest rate is #10.0%#

#A=P(1+r)^2 ;A=$1210 , P=$1000#

#1210=1000(1+r)^2 :.(1+r)^2= 1210/1000# or

#(1+r)^2= 1.21:. (1+r) = sqrt 1.21=1.1#

#r=1.1-1=0.1 or 0.1*100=10.0%#

Interest rate is #10.0%# [Ans]